4 years and a recent $2 Million investment round for this insurtech start-up
Given their recent $2 Million investment round as early growth capital, we thought it would be a great idea to sit down for a talk with Sebastien Gaudin, CEO of Chinese health insurtech start-up The CareVoice.
Sebastien, please tell us a bit about how The CareVoice came to be active in the health insurance industry. Have you been focused on health insurtech from the beginning in 2014 or was there a different journey for your company?
S: We weren’t always oriented towards the insurance industry. At first, The CareVoice was mostly B2C oriented. We had developed an open mobile healthcare platform allowing people to share their experience of various medical providers and practitioners, giving ratings and providing recommendations to the community.
Early on, we partnered with hospitals and clinics interested in improving their patient experience and their quality of care. However since we wanted to remain independent and transparent in the recommendations we gave our users, we couldn’t accept revenues from medical providers to avoid conflicts of interest. At that time, like most young startups, we had difficulties finding a valid revenue model.
In the spring of 2016, we found our business model. We first decided to focus on the booming premium private healthcare market, targeting first-class private medical providers and affluent Chinese consumers willing to pay more for high-quality patient-centric care. At the same time we operated a shift in business model towards insurtech and developed VIP membership solution (SaaS) for insurance incumbents. This is today our core product. We help insurance members to find and access high-quality medical care according to their needs and their health plans, ease the usage of their insurance benefits and overall support them in staying healthy. We signed our first insurance client and implemented the service in winter 2016, and that is how we entered the health insurtech industry!
How is the most recent investment round going to impact your business considering you are a start-up in the competitive Chinese market?
S: Even though our revenues increased exponentially over the past 18 months, since our insurtech pivot, we stayed very lean with a team of 12-15 people. It became difficult to keep up the pace to upgrade our platform and implement newly-signed contracts. Thanks to this financing round, we have been able to grow our tech, marketing and business development teams and attract senior talents. We already on-boarded an amazing VP of engineering, a part-time senior insurance BD consultant and a marketing director. We are also about to be joined by a senior in-house medical leader to strengthen the establishment of our own quality- and cost- certified medical network.
Another goal is to accelerate our growth in China key cities and start operating in a first Southeast Asian market. In the next 12 months, CareVoice should work with over 10 insurer clients and provide half million individual policyholders and 200 employers with our service.
This financing round was led by two VCs and involved Chinese and Asian healthcare investors. This also brings CareVoice solid complementary entrepreneurial perspectives, access to valuable resources, and support for our future financing needs.
China’s healthcare and insurance markets are massive and highly competitive. However private healthcare and private insurance remain niche markets, with less than 10% of Chinese people visiting private medical facilities, and less than 5% buying private health insurance. Niche but fast-growing. Indeed the premium for private mid-to-high end medical plans should already reach 4 billion dollars by 2020. The CareVoice is the only company, as of today, specializing and operating with its offer on this market.
We are in a blue ocean and keep upgrading our solution to meet the needs of larger insurance players, to attract and please their affluent members. We leverage our own tech development and also external technologies or services that could be delivered through a single digital customer experience for insurance members. We operate through a B2B2C model that requires a deep understanding of hospital and insurance sectors for an effective execution. It also limits opportunities for new entrants as we have integrated relationships with our clients. Finally, as an international startup in China, you “must” have an “unfair advantage” to succeed and our international healthcare standards are key drivers for the expansion in private healthcare and insurance markets. These core competitive advantages allow CareVoice to lead the way and bring its personalized healthcare navigation mobile solution, combined with its independent recommendation and rating platform for medical providers, to more and more insurers.
You mentioned that you have a B2B2C approach. Could you give us some details about your business model and your client portfolio?
S: Our business model is now mainly B2B2C. We acquire members from insurance companies (both through individual and corporate accounts) and from medical providers that use our patient feedback tools and recommend The CareVoice to their patients. However our revenues come from insurance companies.
Our core service is our VIP solution membership for insurers. It is a Software-as-a-Service (SaaS). Insurers simply pay an annual fee per members using our VIP solutions. It is very cost-effective for them comparing to developing their own digital solution. They pay for what they use and don’t need to invest in extensive hardware. Once the contract is signed, we implement and maintain the service on behalf of the insurer. We also drive the onboarding of the new VIP insurance members.
More recently, we have developed a second service for companies in the health industries (insurance or pharma). We run for them targeted marketing or educational campaigns on our open platform, reaching an audience interested in private medical care. Through this channel, we can also educate and generate demands for specific medical insurance plans that are combined with our VIP membership solution.
Our insurance clients already include leading international and Chinese insurers such as AXA, Ping An or Chubb. We also partner with reinsurers, such as Munich Re, who then recommend our solution to their insurer clients or prospects.
Being part of the insurtech wave certainly means growing in a competitive environment with all the players on the market. What do you think can make the difference for the success of a startup active in health insurance?
S: Health insurance is a highly complex market with lots of specificities due to the multitude of stakeholders: hospitals and doctors, pharmaceutical firms, patients, employers, and even the government. There are many touch points with the end-customers and many services opportunities but you have to deal with high claim frequency and above all cost pressure.
To make the difference, at least in the segment we target, a startup needs to:
- Have a deep understanding of the healthcare sector from multiple stakeholders’ perspective
- Be customer-centric and differentiate itself with the integration of innovative services
- Be data-driven, creating value for the insurers to drive client retention and sales
- Be able to partner with complimentary service/tech providers to keep up with the pace of innovation
Are you planning to expand your services outside of China? Do you think the Chinese market is an ideal one for starting a business in the insurtech sector?
S: For now, we are considering expanding to Southeast Asian markets where issues with the healthcare system - similar to the ones in China - start to arise. The demand for private medical insurance in countries such as Thailand, Malaysia, Indonesia is also growing. We are thinking about targeting Hong Kong as a first market, following the demand from insurance companies that want to provide better service to the many Chinese mainlanders buying their medical policies and consuming care in Hong Kong.
China is definitely a great place to innovate, especially in the digital and mobile space. Regarding the healthcare and insurance sectors, they are growing fast without any established model for now. You have room to create something new and innovative. People are keen to adopt innovations and test new models they believe can be drivers of dynamic and sustainable growth. Furthermore, a lot is happening in China in the fields of AI, Fintech and Healthtech, which for The CareVoice means numerous possibilities for partnership and product improvement.
What is your take on the incumbent – startup relation? Do you think it’s meant to go a long way or will they become one on the medium or long term?
S: With its recent IPO only 4 years after its creation, ZhongAn is proving insurtech startups can provide a digital full-stack offering to consumers. With such a challenger in their backyard, I think insurance companies reacted well to the first signs of disruption by innovating and engaging with the market. Betting on the power of partnerships is the way to go as several Insurtech startups focus on solving actual pain points that the incumbent insurance industry fully recognizes, such as user engagement.
Of course some startups will grow big and some will be acquired, but I don’t see either insurance incumbents nor insurtech startups merging into one entity in the long term. Insurance incumbents have an ability to bear and manage risk on a large scale that no startup company can ever achieve. On the other hand, startups bring incumbents a connection to customers and an ability to innovate quickly and adapt to market transformation.
Where do you see the health insurance industry in 10 years from now?
S: When people think of insurance they think of a protection, nothing more. Until they are facing an issue (theft, accident, disease) they think of it is a necessary cost to bear. Definitely not helpful, rarely useful.
It might have been fine before, but millennials now want to be able to interact with their insurer, they want to get closer relationship and more value out of them. In the health sector, insurance providers have to understand not only when to help their customers with their needs but how to best help them. They should rethink the way they engage with customers if they want to retain them. Insurance providers need to completely rethink their role, which will very likely change the perception that customers have about them: they will be seen not insurers anymore, but true health partners.
